November Trailer Orders Decline From Strong Year-Ago Performance

This story appears in the Jan. 7 print edition of Transport Topics.

Orders for new U.S. trailers tumbled 22.8% to 22,306 in November from the same month in 2011, when new orders hit a recent peak, but manufacturers said they remained very busy at the end of 2012.

Though November’s total for new trailer orders was far below the 28,909 orders a year ago, that month in 2011 was the strongest for new orders in the past two years, ACT Research Co. reported.

“This is a much more mature part of the buying cycle for trailers than where we were a year ago, so it’s not surprising that orders are down from 2011,” said Frank Maly, ACT’s director of commercial vehicle transportation analysis and research.

New orders were also down month-over-month. They dipped 5.6% compared with the 23,637 units ordered in October (12-3, p. 1).

Despite November’s fall, manufacturers and an analyst said growth in shipments of completed trailers should continue this year.

ACT expects total U.S. trailer shipments for 2012 of 242,000 units and estimates this year’s shipments to reach about 255,000.

The trailer industry traditionally tracks shipments of completed units rather than sales.

Trailer makers said they were not only supplying the typical end-of-year rush, but also have a sufficient backlog of orders to keep them building through the spring. Two manufacturers even said the backlog for dry vans is getting a bit too long.

“We’re pleased with how 2012 ended and how 2013 is beginning. We haven’t had to reduce our build-rate for the start of the year,” said Chris Hammond, vice president of dealer and international sales for Great Dane Trailers.

“We’re feeling very bullish on dry van sales, and we’re happy with flatbeds. Refrigerated trailers have been steady,” Hammond said, adding that reefer sales are usually not as volatile as the other two groups.

U.S. trailer shipments have been especially volatile in recent years, falling to about 80,000 units in 2009, ACT’s Maly said.

The current level of shipments is comfortable for manufacturers, they said.

“By historical standards this is pretty good. Yes, it’s been higher, but 250,000 units for the industry is pretty decent,” said Glenn Harney, chief sales officer for Hyundai Translead, San Diego.

“We had an exceptionally good start to 2012, so I think the start of 2013 will be a little less than that, but overall, 2013 should be comparable to 2012,” Harney said of his company’s business level.

“If you look at the last 20 years worth of data, 220,000 to 240,000 units industrywide is average to good. This is a good market level we’re in now; we’re right in that wheelhouse,” said Great Dane’s Hammond, who works out of the company’s Savannah, Ga., office.

“For us, dry vans are the hottest market, followed by reefer trailers and then flatbeds,” said Craig Bennett, senior vice president of sales and marketing for Utility Trailer Manufacturing Co., in City of Industry, Calif. “I think we’ll surpass 2012 levels in 2013, but by single digits,” he said in characterizing Utility’s sales expectations.

As dry van shipments fell more deeply during the recession than did refrigerated shipments, Bennett said he thinks dry vans should still have strong growth this year.

“Dry vans are doing best, in part because 2009 was so bad. They still have some catching up to do,” he said.

For Great Dane, Hammond said he has similar expectations for the flatbed market.

“It basically went away in 2008, ’09 and 2010. The housing and automotive industries are on an improving trend, and they can generate a lot of flatbed freight,” Hammond said.

ACT tracks the industry’s backlog-to-build ratio, and said in November it was at 4.6 months, meaning that if the industry maintained production levels and took no new orders it would take 4.6 months to build all of the requests already on order books. On average, said Maly and the manufacturers, 4.5 months provides a sufficient cushion for manufacturers, but also allows them to service customers promptly.

In the dry van sector, though, a bloat appears to be starting.

“The backlog is pushing out and getting out there, especially on the dry van side. To handle that we make sure we’re always building stock trailers that can be sold off the dealers’ lots,” Hammond said.

Added Utility’s Bennett, “The dry van backlog is getting a little troublesome. The backlog for reefers is normal, and for flatbeds, it’s even shorter.”

At Stoughton Trailers, the lack of labor might be the largest constraint for improved sales, said Dave Giesen, vice president of sales and marketing. “Orders and quoting activity are pretty good and steady. We’re happy where it is,” he said.

“But one of our biggest challenges is hiring people. We’re highly automated but still need a lot of man-hours. Hiring assemblers has been a consistent message for us lately.”

Stoughton makes plated and sheet-and-post dry vans and intermodal equipment. Giesen said sales have improved among all customer types.